Skip to main content

tv   Squawk Box  CNBC  September 16, 2022 6:00am-9:00am EDT

6:00 am
2 2022 and "squawk box" starts right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick with joe kernen and andrew ross sorkin. here we go it's friday at the end of the precarious week for stocks at this hour f you look at the u.s. equities, you will see red arrows dow indicated off 250. the dow was down 173 yesterday it was the best performer relatively speaking compared to the other two. s&p off 1.1% nasdaq off 1.4%. before you see the red arrows with the nasdaq down 130 and s&p off 36, look at the damage this week this is before you see what has
6:01 am
been happening here. 3.7% decline for the dow industrial s&p down 4%. nasdaq off 4.6%. it is a quadruple witching friday you know yields picked up. treasuries right now joe, ticking closer to 4% terminal rate people talked about. ticks higher every day 10-year treasury at 3.47%. the british pound hitting a 37-year low against the dollar falling below 1.14 for the first time since 1985. the strength of the dollar continues in all of this as the fed is expected to raise rates significantly next week. >> i like that word precarious i don't like it in the way you used it. it's already been bad. >> it's not october yet. precarious means you're on a
6:02 am
cliff. >> not what already happened what you think -- >> i am thinking about october >> i don't like that you are saying it was bad enough this week. if we are perched -- >> you feel we hit bottom this week >> what do we know the last thing you want to do is pick your bottom >> this is true. what we heard from barry and then the ceo with jim cramer that was concerning. >> you put it in plain english and a year ago mortgage rates were 3% and now 6% how much -- what is the cost of buying a house people will have to rent >> nobody will move. >> people have to rent whoever is renting will say you have to pay this that's going to be inflationary. a lot of -- we're in a precarious position. >> that's how i feel >> i know. i thought it has been a horrific week already we're in a precarious position.
6:03 am
>> it scares me of what is to come what happens with october? is this the pain now >> it is september 12th or whatever it was. we are not worried about october. now we are worried >> ge had comments, too. we will talk about that. the european stocks this morning have been reacting as well very quickly you see right now the dax in germany is off 1.6% the ftse 100 is flat let's talk about the top corporate story. fedex shares are down sharply. the latest earnings and revenue falling shortly. withdrawing the forecast it issued three months ago. global demand and slowdown picked up at the end of last month and expects conditions to worsen pick up is worse
6:04 am
not pick up as good, but bad here is the ceo on "mad money" with jim cramer last night. >> the u.s. consumer has been spending less. the u.s. has somewhat isolated because the dollar is the choice of currency for the world, but the u.s. is slowing down. >> fedex telling investors will cut costs and shedding stores and facilities and reducing labor hours. some ecommerce companies have been falling on that fedex report look at u.p.s. and xpo and amazon that are trading lower. fedex is a bellwether not of everything, but amazon in particular. >> if you watch the transports from here. that is the huge concern transports are the leading indicator of the big recession coming watching this news and hearing what happens is going to be a
6:05 am
big concern. those were the biggest stocks in europe transportation stocks down. other corporate news fedex is what we focus on, but ge the cfo telling the conference that supply chain issues are still impacting the company's ability to deliver in a timely manner the cash flow remains under pressure $66 now. what does that equate to pre-reverse split? >> 8? >> 1 for 8 historic market cap regardless of how many shares at $68 a share, it was $75 billion. down a little from the $65
6:06 am
billion. global investors are listening to the corporate comments on business conditions ahead of the fed meeting next week here is what barry sternlicht told us yesterday. >> i am losing my preverbial with the fed it was pure speculation. we have seen crazy behavior. they did nothing now that inflation arrived and actually is headed down, they are raising rates too aggressively this will be the fifth rate rise this year. the steepest increase in rates in history >> the fmoc will begin gathering tuesday and decision and jay powell conference set for wednesday. this is what the markets are keying off ahead of this andrew. a news alert from washington the biden administration
6:07 am
releasing the role on digital assets ylan mui has details on that >> reporter: andrew, the white house is issuing the government's first framework on digital assets it says the goal here is to mitigate the downside risk of the volatile industry and harness the benefits where proven the treasury department and commerce and white house contributed to the effort. brian deese said without proper o oversight, cryptocurrency is risking every day americans. the fed should keep exploring a digital krcurrency which the whe house says could have benefits the department of energy and epa will track the environment al impact of crypto there is a focus on finance. the white house is weighing whether to ask congress to amend the bank secrecy act and money
6:08 am
laundering laws to reference digital assets treasury will risk digital assets this is the follow-up that the white house released back from march. the cryptocurrency industry worked closely with the administration back then we will see what happens today guys, think of the release of the blueprint for the regulation down the road. the regulation is coming back to you. >> ylan, thank you for the report we will keep our eyes on this as it progresses. when we come back, we will talk about how it is a quadruple witching friday. it adds to the volatility. stock index futures and options and options and single options expiring during the final hour of trading we will ask stephanie link why this matters the dow indicated down 250
6:09 am
points nasdaq down 134 and s&p down 37. let's look at the pre-market winners, if we can find any, and losers, too. con ed and dte and federal realty investment. stick around you are watching "squawk box" d iss bc >> announcer: this cnbc program is sponsored by truist wealth. where meaningful relationships matter most.
6:10 am
my dad was a hard worker. he used to do side jobs installing windows, charging something like a hundred bucks a window when other guys were charging four to five-hundred bucks. he just didn't wanna do that. he was proud of the price he was charging.
6:11 am
♪♪ my dad instilled in me, always put the people before the money. be proud of offering a good product at a fair price. i think he'd be extremely proud of me, yeah. ♪♪
6:12 am
millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. proud of me, yeah. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save by talking to our helpful switch squad at your local xfinity store today.
6:13 am
welcome back to "squawk box. in corporate headlines, astrazeneca up by more than 2% after the covid cocktail approved in the eu. and shares are falling again. it will be a losing week dow down 3.7% so far s&p down 4%. nasdaq almost 5% in a single session on tuesday we have stephanie link with us you don't see fedex usually move 20% up or down on any given day. down is more likely. down 20%
6:14 am
you have to say something dire to have that happen, steph >> i think, joe, it is macro and micro. we're all nervous about the macro. the data has been disappointing. ppi and sales and auto down two months in a row. industrial production missed at the same time, the inflation story is hot and the job market is strong. the fed is now being more hawkish and tightening into a slowing economy. fedex reinforced that. >> slowing is a word that could be, you know, we need to know exactly what slowing means yesterday, we had barry on he say real estate guy obviously when mortgage rates double and you start to forecast what that could do to consumers, i could see why he is bearish. is slowing now capitalized
6:15 am
if we have hot inflation with a rapidly slowing economy, you know, the hard landing scenario comes back on the table in a big way. is that what's happening here? 6% mortgage rates. is that going to do it >> rates are going higher. they will be hawkish is it 4% or 5% fed funds we don't know. rates are going higher the problem, joe, is that we're not going to feel it for another nine muonths because of the lag we are slowing, no question. i think 2023 is more likely a recession just given the lag impact when you look at the cpi number, if you didn't have gasoline down 10% month over month, that number would have been closer, cpi overall closer to 10%. they will have to be hawkish and
6:16 am
raise. that's the life we are living in at the moment. you know, it's a challenging time we're already down 17% year to date on the s&p. the market is a forward looking mechanism. let's stay calm. stay diversified look for opportunities fedex is not one that i would be buying here. they have, as i mentioned, micro problems as well some internal problems as well the express business is 50% of total revenue. they missed by 500 million the costs are higher than expected that's not one i want to buy at this point in time there are names out there that i think can survive andmaybe the go down, but go down a little bit less >> steph, it is almost a case study of stagflation i referenced barry today he said you would have to be insane to be the fed to see the
6:17 am
potential cliff we're on in terms of the economy if they continue to raise. you have to be crazy if you raise if you cared about the economy. you said given the inflation numbers, you would be insane not to go at least 75 or 75 again. we had some people say 1 or 2 points you have people say -- how can you talk about both? the economy going off the cliff and we need to raise rates higher than people think that is the worst possible scenario >> that is the worst possible scenario the fed has two mandates jobs and unemployment and inflation. the strong jobs numbers give them the cover to be aggressive. the initial claims number is the bright spot of the week. it was down for the fifth straight week. four-week moving average is down
6:18 am
8,000. jobs remain strong the fed doesn't have to worry about that now stle to ge they have to get inflation under control. we are in more trouble >> people are saying tech is down some are pointing to the adobe deal normally that activity is not negative adobe said no one can do public. we are getting great opportunities. i don't know is $20 billion a good price? do you know anything about this company? what is it priced? probably a big price to sales number >> they're paying 55 times r recurring revenue. that is a big ticket it might be very -- right. that's a big -- that's a very big number
6:19 am
they're not going to see synergy until three years. >> would that spread that's not like other tech stocks we have plenty of reasons. it isn't animal spirits that sometimes you think would boost stock prices that's not what we're seeing >> no, but i think it is not necessarily -- i think the deal and price tag was very high and people are questioning now if remember saiding into the recession, you could have gotten a better price they guided down they said deals are taking longer to close. so that is another reason why the stock was down so much it is a bellwether a lot of people like the name. it is well owned you can see the reaction overall. i think we have more of the kinds of things coming you know me, i'm underweight technology i don't think it is just technology numbers have to come down. no question about it >> all right
6:20 am
thanks, stephanie. we appreciate it >> thanks, joe >> i can't wait until it is incorporated into adobe. >> what are you doing on adobe >> it would take long to explain. once it gets in there and i have the abilities added to what i'm already doing -- are you excited about that >> photoshop is a wonderful thing. >> you do terrible things with that don't do that. >> i put your head -- >> trump with the wrinkles and add 30 pounds. i see what you do to the poor orange guy >> not me. coming up, an nfl game carried by a streaming service exclusively. we will talk amazon and the business of sports. check out cryptocurrency bitcoin down under 20,000.
6:21 am
19 $19,772. h etis down after the merge. you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit
6:22 am
this is not just laundry. this is laundry that's smarter than the dial. this is ge profile smarter wash technology. fully optimized cleaning, no more guessing. this is smarter cleaning. this is ge profile.
6:23 am
this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. as a main street bank, pnc has helped over 7 million kids develop their passion for learning.
6:24 am
and now we're providing 88 billion dollars to support underserved communities... ...helping us all move forward financially. pnc bank: see how we can make a difference for you. welcome back to "squawk box. it is time for the executive edge uber says hackers gained access which started a week after the trial with the former security chief and how he stopresponded o the breach in 2016 shares are down 5%, joe.
6:25 am
the chiefs beat the chargers last night thursday night football. the final score 27-24. beyond the action on the field, reviews and fan reaction coming in about amazon prime. last night was the first time an nfl game was carried exclusively by a streaming service mike francesca tweeting i will watch a game on any platform, but amazon has to do a better job of the quarrellity of the v. and thursday night football on amazon prime amazon has the contract with the nfl. we are sorry for the inconvenience. our parent network did last week's game. i think it was also on amazon prime. you could watch it on normal tv. >> i saw roger goodell in the
6:26 am
box with jeff bezos. >> we had jason robins of draft kings on last week the deal they are doing now and cancel this. it is working out too well for people if either team you pick on the money line, during the game and they're up 7 points, they close the bet and you win. last night, a point where the charger were up by seven, because i took, because i had better odds with the chargers. i got a better return. both kansas city and chargers were up by 7 at one point. this is not going to last much longer. >> am i wrong? i thought nbc, our parent company, was providing some production services for amazon >> why isn't it? >> is the issue of the quality or production? >> i don't know. actual editorial
6:27 am
>> i thought the critique wasn't that it was buffering, but they didn't like how it was being put together the show was put together from what i understand in concert with folks from nbc. >> we will beat this story today. we will find out i certainly don't want to talk about the markets. >> you had enough of the markets already? 6:27 >> a rough week. >> too much. >> we need to. it is unpleasant coming up, a familiar face to cnbc. michelle is back with us we'll talk china and what u.s. investors need to be watching right now. remember, she had a great book called "you know i'm right." >> correct >> did she change it to you know i'm left she ran as a democrat. you know i'm left doesn't have the same ring. >> it is hard to win as a
6:28 am
republican in new york >> it is here is a look at yesterday's s&p winners and losers as we head to break. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. ♪♪ i don't accept this. i can't do this anymore. impossible odds, save the world.
6:29 am
i'm done. what do you have for me? a new way to transform our agency. strategy to execution. oh, looks my laces have come undone. a business card? yes, for ey. tech expertise? $2.5 billion invested. impressive. okay, you've convinced me, i'm back. just gonna... get this... with my hectic life you'd think retirement would be the last thing on my mind. thankfully, voya provides comprehensive solutions and shows me how to get the most out of my workplace benefits. voya helps me feel like i've got it all under control. voya. well planned. well invested. well protected.
6:30 am
6:31 am
good morning welcome back to "squawk box" live from the nasdaq market site in times square. the dow is off 228 points. nasdaq down 125. s&p down 35. all this on the back drop of fedex shares getting hit hard. the revenues and earnings falling short. the shipping giant withdrawing the forecast it issued three months ago as a result, we are seeing some continued cracks in the larger market as it may very well be a signal or bellwether of where
6:32 am
the rest of the economy is headed shares of delivery companies and ecommerce companies are falling, i should say, following that report xpo and amazon and united parcel service. funny amazon is in there they are a tldelivery service their business is itself a bellwether of transport and retail. >> we are talking about the leading indicator. tr tr transports down 25% from the highs. this is a signal bleeding for some time. the declines in the market cap at fedex for this. one day decline of 20% is like a complete re-rating of the market overnight for the transports for fedex in particular. this is a significant decline. $10 billion in market cap? >> $52 billion company at this point. down from much higher levels some of it is fedex and some is
6:33 am
macro. whatever you want to attribute it to or just maybe we're in a precarious position. coming back to that word on the precipice. we have phil lebeau with the latest on the 737. >> joe, we are talking about the 737 max which have been built and waiting for delivery to customers in china these planes built in 2018 and 2017 and 2018 before grounded. during that time period, they have a little over 100 built and ready to be shipped and out at the moses lake facility being held they can't be held because of what is going on with the trade relations with the u.s. and china. as a result, the company has patiently saying eventually
6:34 am
we'll deliver them yesterday, a couple of boeing executives said maybe it is time we put new liveries on the planes and deliver to other customers who are ready to take them immediately yesterday, cfo brian west spoke at the conference in california. we delayed for a long time we cannot defer the decision forever. we will re-market the airplanes that were otherwise ear marked for chinese customers. boeing has been steadily increasing 737 production in washington you talked about ge earlier today indicating they are seeing challenges in the supply chain yesterday, ceo dave calhoun said the supply chain is challenging. it doesn't mean they are bringing down production rate, but challenging as you look at the shares of boeing keep in mind they have 4,361
6:35 am
commercial airplanes in the backlog. the majority of those 737 max. these are clearly not going to china any time soon. they will look at the process of going to other airlines and saying you have max on order we will move you up in line and deliver sooner it lowers inventory of the built aircraft and that should help the cash flow once they start to deliver aircraft >> you could use it, phil. it still is pree-eminent manufacturers. >> this is boeing. this is saying this is not the case of we don't need china. we love to get things out with
6:36 am
china. they have a finishing center they haven't put into use yet. they want to supply the chinese commercial aviation market at this point, it looks like it is anyone's guess when it will happen will we see normal trade relations? >> it real as i important, phil. especially now, it seems we have global issues in terms of the gdp and growth and everything else. without china, we had senator tom cotton on yesterday. he said we have to stop doing business with the leading memory chip maker in china i took that as if you have a problem with china in general, there are a lot of things we are not that we gotten used to. that is a different world. it is better if we don't go there. >> what is the market cap the boeing if they can't do
6:37 am
business >> all the way at 888 now $75 billion, phil. staggering >> right right. these guys need china. the commercial planemakers need china. you know who is still doing business in china? airbus it doesn't mean boeing is boxed out forever. they have been patient hoping that eventually things would get resolved clearly, you can't sit on 100 aircraft forever at some point you have to say we have other people who want to fly the max. if we can put them in service and deliver them to customers, that's what we will start doing. >> truf ough choices to be made. the nba. the weird position the nba was put in more fans in china than the entire population of the united states for the nba how do you walk? it is hard to walk this line if you base everything on human rights and morally
6:38 am
we will have a problem economically thank you, phil lebeau >> you bet. joining us now to talk about china and the situation and recent xi and putin meeting, we have michelle cabrera. >> welcome back. >> a cnbc contributor. >> i thought you looked familiar. >> and long time colleague and fr friend >> it is an honor to sit here with you guys. on the """squawk box" set. >> did you hear? i knew you were going to talk china. this is -- go ahead. this is -- what do we do >> it is an extraordinarily difficult situation. particularly the xi-putin meeting yesterday going into this with the expectation this was going to be a dramatic show
6:39 am
of force between the two it turned out not to be the case what we got was the message there was some kind of strain between the two because of the situation in ukraine putin was apparently forced to say out loud and knowledge that china has concerns of what is going on in ukraine and will clarify their position through the meetings that's good news for the u.s. markets because if there were strengthening and if we were going to see china starting to support them militarily, that would mean more sanctions. china clearly wants to preserve market access and still wants to buy planes they are making that choice. that's good news >> let's back this up. the reason we are concerned about this is because the meeting at the beijing olympics when you saw our leader, president biden, stay home and not attend you saw putin go and the
6:40 am
statement afterwards about how basically they're the best of friends and no space between them >> no limits to what they were going to do together yesterday, we saw apparently there are limits that's good because every time we see any kind of sanctions or denial of market access like with chips going to china, we do in the name of national security at the same time, it is painful for companies that get cut out as a result. the other thing on the agenda for them yesterday, arn that will continue, is energy china is looking for more sources of energy and russia is looking for more markets to deliver. they will restart construction on the pipeline through mongolia for natural gas. the russian energy minister said yesterday this is going to replace nord stream 1 and capacity of the pipeline is almost the same of nord stream 1 that feeds in europe
6:41 am
>> is china's xi pretending he has an issue with the atrocities that are occurring in ukraine or does he have a problem with the economic dislocation it caused for china and hurting their gdp? they've got their own house not in order in china. >> they have a lot of issues >> what is the problem >> when i first heard that, the first immediate inclination is they are upset that the war is going poorly in ukraine. maybe it is they are upset he did it at all. we don't know. it was very cryptic. i always pronounce the "t. >> if you look at it, china matters. it is the big economy here russia was trying to ride on the coattails on this. this is china saying you are
6:42 am
causing problems and we're not necessarily going to protect and defend every single thing you do >> this is historically a tough relationship they have never trusted each other. another example is just this week they announced a new railroad running through mongolia to bring coal to the chinese border mongolia was once controlled by russia the rail system built by russia. guess what happens when they get to the border, they unload the coal and re-load it in china on a different rail system at the cost of $3 per ton. why? two rail gauge sizing. why? they were concerned the other would try to invade each other here in north america, we run trains from canada to mexico we are not worried about the inter-operability a threat to the national security. there they still are. >> one story we talk about here
6:43 am
is liv golf. i'm harkening back to doing business with saudi arabia at this point the world. you have to think about these things in the world right now. i bring it up because greg norman, the ceo of liv golf. i said i'll read this and see if the elephant in the room is mentioned. no not a word if it is blood money or 9/11 was just last sunday no one word. it is competition and guys making more money and no cuts. can we live in a world where we just say, hey, the economic reality is we have to deal with saudi arabia and deal with china and we can't really expect them to have -- >> i think it will upset some people to hear or learn that what the u.s. framework will be about is about national security ultimately our national security.
6:44 am
decisions. >> rather than human rights. >> yes we would like to have influence there. historically it has been difficult. >> yup >> and we have relationships. >> it hasn't been working either not just difficult it hasn't been working for 30 years. >> the pipeline thatmongolia those things take years. >> they do they have been working on it for a while and construction stopped when the ukraine war started because of the concerns of sanctions and ability to get product. 2030 not as far away as you think it doesn't immediately solve russia's issue of where do they sell excess natural gas. >> i can't imagine china would put itself in the position germany did being solely reliant on the pipeline. >> in that is why xi is doing what people are calling the
6:45 am
beijing straddle we like to have more supply from -- >>if he is thinking some day i want taiwan, he has to have access to energy that comes from other places that would be -- he would get if there is a maritime block for example >> what do you think is the timing in. >> i don't know. do they see weakness now and therefor therefore, they want go sooner >> i think it is easier for them to do it in a couple of years sunsh once we figure out the chip piece. it makes the whole thing easier for us to walk away and easier for them to actually do it. >> one final thought is everything being the same. china is going to struggle to
6:46 am
grow dramatically. it is a different place. >> yeah. they need to grow. they have a lot of people counting on their standard of living there we'll see you. are you anchoring "power lunch." >> i'm a contributor >> all right >> michelle, thank you >> always an honor and pleasure. when we come back, the themes putting pressure on the futures this morning there are doozies. fedex at the top of the list dow was down 250 before. s&p futures off 27 nasdaq off 101 stay tuned you are tcngsqwkoxwahi "ua b" and this is cnbc is is laundry that's smarter than the dial. this is ge profile smarter wash technology. fully optimized cleaning, no more guessing. this is smarter cleaning. this is ge profile.
6:47 am
i remember when i first started flying, and we would experience turbulence. i would watch the flight attendants. if they're not nervous, then i'm not going to be nervous. financially, i'm the flight attendant in that situation. the relief that comes over people once they know they've got a guide to help them through, i definitely feel privileged to be in that position. ♪♪ power e*trade's easy-to-use tools like
6:48 am
dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit
6:49 am
6:50 am
at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect. today, we're doing it again, with massive investment. in modernizing our infrastructure to build for tomorrow at build america mutual, we protect your municipal bond investments that help make it happen, building a vibrant
6:51 am
future for our communities and our portfolio. invest in the future of america with bam-inassured bonds
6:52 am
welcome back to "squawk box. return to the office debate, the one we've been talking about all week is still on according to a recent survey, about half of workers in manhattan are back in the office on an average weekday. that's up from just 38% last april. but only 9% of workers are in the office full time joining us right now is right now is kathryn we've been talking about what it means to -- for the city to get
6:53 am
back on its feet where do you think we really are and how much of an upswing are we on? i know it feels better, but i don't know if it feels good enough. >> well, we're certainly moving in the right direction, andrew we're seeing that employers are still encouraging their people, carrots, not sticks, not to come back to the office we're going to be over half the employees back in the office on the average weekday at the end of the year. we're headed the right direction. old habits are hard to break for 2 1/2 years, folks have been working from home, working remotely and it's tough. we've had four false starts on reopening the city and getting people back to the office starting in june of 2020. >> if we're only at 50%. if that's the number, do you think we have to revise down our sense of what the future of the
6:54 am
city looks like and do you think companies are going to have to rethink what they're -- what their real estate footprint actually is. there's been a sense, we're going to get there, we're going to get there, we're going to get there. and there's this other view that maybe we're never going to get there. >> we asked the companies. we asked, do you think your real estate footprint is going to shrink and only 10% said they thought they were going to shrink most are still uncertain but the majority are going to feel that they'll be either equal or more in terms of both head count and real estate so employers are not seeing this necessarily as a permanent condition and they're not seeing it as a serious problem. and i think the same is true for the city that the city is going to reinvent itself as we always do out of a crisis in particular. so that's going to happen. things are going to be a little different. we know that we're going to have less retail activity because
6:55 am
e-commerce has so escalated during the pandemic. so we're going to have change, but new yorkers are great at change. >> how much of this do you think is a function of what people view as a policing problem, a security problem in the city >> at this point it's really inertia more than anything else, andrew about 24% of the respondents said that they thought the problem was fear of public safety, especially on the subways. but that's way down from what it was when we surveyed last year so we're seeing it go in the direction of people are just saying, we're just as productive as home or our friends don't have to go into the office so why should we? so what -- what we're seeing is just sort of a resistance to change. >> what about the -- what i'm seeing as additional cost in the office place to get people to work julie sweet talks about this
6:56 am
phrase, you have to earn the employee's commute these days and you're seeing a lot of companies that are almost running, like, a disco party in the lobby of some of these banks and other places where you go in and there's a deejay and they're playing music and they have food -- >> ping-pong, whatever -- >> all of it but all of that is an additional cost it comes at an additional cost s. that just, you think, a way to get people in the door or back, or do you think this is a new sort of permanent reality? >> i think overall employers are saying that they recognize going forward, office culture and stickiness of the office is going to depend on purposeful activity a ceo said to me the other day, if somebody is going to spend their entire day on zoom calls, they might as well be at home. if we're going to have interaction in the office, team meetings, social activities, free food, they ought to be in
6:57 am
the officer. i t new york employees are ambitious. typically people come to new york because they really want to get ahead. and getting ahead in life depends on relationships so i'm confident that people are going to be back, that office culture is going to continue to be important there's going to be more flexibility in the schedule and, again, employers are going to try and be more purposeful about what's happening in the office >> kathryn wild, always great to see you when talking about strivers in new york we're all striving >> think about goldman sachs. >> yeah. >> they have a disco in the lobby, they need a disk jockey, they got -- he's right -- am i -- they don't have to pay him if they have a disk jockey in the lobby -- he's already there.
6:58 am
i'm a thinker. >> i know you are. we'll be back. two big hours ahead. fedex shares getting hit after the company pulled its forecast 20%. the ceo says he sees the world entering a worldwide recession we'll talk about it. >> announcer: cnbc work is connected by airtable. this is how. t of view. this is the system you built moving from concept to customer. this is how. airtable. i may be close to retirement but i'm as busy as ever. and thanks to voya, i'm confident about my future. voya provides guidance for the right investments. they make me feel like i've got it all under control. voya. be confident to and through retirement. at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan
6:59 am
across your full financial picture. a plan with tax-smart investing strategies designed to help you keep more of what you earn. this is the planning effect. with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity this is not just laundry. this is laundry that's smarter than the dial. this is ge profile smarter wash technology. fully optimized cleaning, no more guessing. this is smarter cleaning. this is ge profile. ♪♪ i don't accept this.
7:00 am
i can't do this anymore. impossible odds, save the world. i'm done. what do you have for me? a new way to transform our agency. strategy to execution. oh, looks my laces have come undone. a business card? yes, for ey. tech expertise? $2.5 billion invested. impressive. okay, you've convinced me, i'm back. just gonna... get this...
7:01 am
good morning stock futures falling as wall street heads for a losing week you're walking four out of five weeks at this point. fedex issuing an ugly earnings warning as it contends with soft global shipment volumes. the stock is down big in the premarket. down almost 20%. we'll tell you what the company is saying about the global economy and the "r" word. plus, the nfl making its debut on amazon prime in a wild showdown between the chargers and the chiefs we'll take a closer look at the nfl's ties with the streaming platform and what it could mean for the future deals and major networks the second hour of "squawk box" begins right now. ♪
7:02 am
good morning welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. we've got the u.s. equity futures down this morning and down in a big way in large part off the back of this fedex news. the dow off 193 points the nasdaq off about 100 points and the s&p 500 looking to open down about 28 1/2 points we're looking at the treasury yields right now looking at 3.4 -- call it 7. we'll round up it just came down there. and oil right now as you think about the energy complex, wti crude sitting at $85.35. and finally crypto has moved down after -- it's been a wild ride over the past two weeks $18,000, over $22,000, now we're under $20,000 again. and then after the big merge when it comes to eth you're
7:03 am
looking at 1469. >> let's get to dom chu. >> joe, andrew, becky, it's probably the biggest driving narrative about why there's that macro concern in the marketplace right now. let's get down to fedex. it reported earnings, the earnings and the revenues were both disappointments versus wall street estimates more importantly, it was the forecast there is none left fedex has withdrawn its full-year economic and results forecast siting some of the bigger macroeconomic conditions that it's facing right now no more outlook. that is helping drive that stock lower by about 20% in the premarket trade. just to give you an idea of just how far iffedex has fallen in the premarket trade, if you look back at the highs we saw earlier this year, this was a roughly $266 stock at one point in january this year
7:04 am
we've lost over $100 per share in market value on fedex because of that result i'm sure a lot of folks are going to be talking about just what that means. we actually spoke to one analyst who says that he's not as concerned about the macroeconomic concerns yes, there are things at play. he feels these are more -- speaking of that, the ripple effects are very evident right now. if you look at ups those shares are down 7%, not 20%. ups didn't report any results. it's just down no sympathy but it's down 7% xpo logistics, down 4.5% right now. some of the names out there that are, yes, smaller than ups and fedex but are feeling some of those reverberations watch those other companies. and then one other transportation-type company that's part of this mix as well is uber technologies down 5% right now. this after the rise-sharing and
7:05 am
food delivery company acknowledges it had a cyberattack and it's a teenager who is demanding more benefits for drivers there. but the hacker claims to have accessed some email and cloud platform over at uber citing security concerns. but uber says it's working with authorities to figure out what happened and what kind of damage was done if any and what kind of access data was out there. watching uber shares down there right now. but, joe, transportation very much a focal point for a lot of traders for a variety of different reasons. >> did a monthly chart of fedex, dom, if you take $41 off 162 121. i'm just going to tell you you know what the monthly low in march of 2020 for the month, the closing low was 121. >> what?
7:06 am
the low for that month of march, 88 the closing low was 121 for march. but it did trade under 90 at one point. >> to barry's point, that's when revenue went to zero. >> went to zero. >> yeah. >> i mean, is that -- are we doing a round trip not just fedex, is that what -- the s&p was 2300 no one is talking 2300 -- >> we're at 3900 right now >> i know. people are talking 3,000 >> but ups is not near there at all. i mean, this is a -- this is very much just a fedex issue for the time being >> remember, i mean, this is -- the macro events, the stuff that happens from it, and ups was the second biggest decliner on the s&p 500. it may not be getting the same treatment. down 6, 7% is a huge amount for a company that didn't say
7:07 am
anything yesterday i mean -- >> no doubt about it if we could show a ups chart here for the last three years. if you look at a chart of fedex over the three-year span, it's down 6% right now and there's no doubt about it this is a very, very big move, but fedex, remember, at the pandemic lows we were talking about, again, that 80 to $90 range over here. at 172, this is certainly a downside move. 6% puts you right around here versus where we were back in kind of like the middle part, early part of 2021 there's a narrative driving the trade, but it's not a fifth of its market value shaved off. your point, no announcement. i'm not sure how much of the macroeconomic concern there. fedex is a bellwether and you've pointed it out quite a bit this morning. i'm not sure whether or not there's idiosyncratic issues
7:08 am
that are going to be weighing more on this than the entire business. >> you call it the three-year transports i think the transports are down 25%. i want to point out something that noah blackstein said to me yesterday. this is from february 20th, 2007, talking about an anecdote from annual greenspan's weekly talks with fred smith, the ceo of fedex, he called it his fedex indicator and pointed out when the stock had fallen off the previous may, that it had moved to the point of that choked-off growth an that tells you a little something too. >> this is the dow jones transportation etf 220 now. down 2.5%. the reverberations are being felt there i think to your point, becky,
7:09 am
why the macro concerns are so big right now, we heard it last night when ceo raj subramaniam told jim cramer that its concerns about places like asia, and you speak of bellwethers, raj spoke about this idea that asia is the manufacturing hub of the world. if you see weakness in asia, that permeates through the rest of the world economy and maybe that's the reason why there is so much being made at fedex. 20% lower for a stock is not just a fall, this is a re-rating of investor expectations -- >> overnight. >> overnight this is a very big paradigm shift for how investors view that stock. >> i wish we hadn't shown that low. what's that 2020 low is that 110. >> we're still double. >> that's what i mean. take that down >> we'll check in later with you. a slew of economic data this
7:10 am
week prompts a downgrade in forecasts in growth for the quarter. senior economics reporter steve liesman joins us right now with a rapid update you're looking at a lot of things that are much more relevant just in terms of real-time data >> yeah. that's in there too. even though retail sales beat expectations yesterday, you had down revisions to spending and other data all that resulted in another downgrade forecasts for the third quarter. here's the rapid update. bring it down from 1.6 to 1.3. forecasters begun the quarter that thinking after those two quarters of negative numbers we would bounce back and have gdp growth above 2%. even now, there's a lot of debate among economists about what exactly is happening with the economy. take a look at barkleys and
7:11 am
atlanta fed, they're down 0.3 and 0.5. you pick your favorite economist and go with it goldman sachs right in the middle jp morgan, a touch more optimistic and there's steven stanley, our friend here, a smart guy, a good forecaster, he's well above. among the areas of uncertainty have trade, they've been swinging back and forth and creating huge uncertainty and big factors throughout the whole pandemic one of the most optimistic says he thinks you have good purchases coming down which is part of what's happening with fedex, and expects a big increase in consumer spending on services like travel still, if the consensus is right, it promises a third-quarter in a row of below trend growth and that theoretically should help bring down inflation and, becky, on this fedex thing, we've been talking for a long time about this shift from goods to services and fedex and the other transports are some of the companies you would expect to be hurt by this, plus what's going
7:12 am
on in asia with the lockdowns there. you would expect pain over there too from that. >> those are excellent points, steve. the shifting u.s. consumer and the rapid conversion that the consumers made hitting another industry pretty hard steve, thank you it's great to see you. >> are we witnessing that in -- >> is this what happened to the retailers? >> no, the nfl a change in the way we do things. coming up, the debut of the nfl on amazon prime. there were some questions about the quality of the feed. the chiefs did make a nice fourth-quarter comeback, and we're going to breakdown the shift. before we head to break, let's get a check on markets we're down a couple hundred on quk x"s mi rht "sawbo icongig back advisor, i stand by these promises: i promise to be a careful steward of the things that matter to you most. i promise to bring you advice that fits your values.
7:13 am
i promise our relationship will be one of trust and transparency. as a fiduciary, i promise to put your interests first, always. charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals. visit millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year
7:14 am
with the fastest mobile service. and now, introducing the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... with the best mobile price for two lines of unlimited. take the xfinity mobile savings challenge and see how much you can save. switch to xfinity mobile today. pst. girl. you can do better. at least with your big-name wireless carrier. with xfinity mobile you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill over t-mobile, at&t, and verizon. wow. i can do better! yes you can! i can do better, too! now you really can do better! switch to the fastest mobile service - xfinity mobile. now with the best price on two lines of unlimited. just $30 a line.
7:15 am
they got to bring down. >> again, quick tempo. and picked off at the one-yard line that is watson out in front. all the way for the touchdown! >> amazon's thursday night football coverage kicked off just last night with the los angeles chargers taking on the kansas city chiefs this continues the new normal for football on streaming but
7:16 am
some fans not happy that they couldn't find it on their cable service provider spectrum replying say thursday night football is now on prime amazon has the contract with the nfl. we're sorry for the inconvenience. joining us now with their take, tom rogers, cnbc contributor, and sarah fisher good morning to both of you. we did have this game last night. it was the first of many we're starting to see so many more streaming services pick up sports how do we believe this ultimately is going to change the game and maybe are we now finally at an inflection point, tom, where some of the biggest games can actually go on streaming? i think part of the issue has been that the big leagues always felt we need eyeballs, we want the biggest number of ieyeballs we can are we at the point where we can put the best stuff on streaming?
7:17 am
>> good morning. i think the answer based on last night from a production point of view is yes. amazon is a logistics company and a cloud company, a lot of logistics putting on a live production of an nfl broadcast obviously streaming that nationwide a lot of cloud and server issues but the question was, were they going to stumble the way apple did when it came out with the major league baseball, and i think they put on a first rate production, very credible, showed that streamers can produce with the best of them. yes, there were some complaints. my video quality was great the audio mixing needed a little help given how loud the stadium noise was at arrowhead but overall, i think they did a great job, increased the credibility for more brothers and sisters -- more parts of packages for the major leagues
7:18 am
we don't have the ratings number yet, what kind of falloff is there in audience. amazon was saying they think they'll do an average of about 12 million on thursday night compared to fox last year when it had the package, doing about 16 million so clearly they're expecting some falloff we have some numbers from my company on twitch where it was streamed, where you pick up a lot of young viewing and on twitch they almost did twice what the average was for thursday night football viewing on twitch last year. came out of the gate strong there and they weren't even really promoting the alternative feed, the one with dude perfect, an influencer providing commentary on a whole different basis than the traditional broadcast. and i think with promotion of that, the twitch young viewing audience will grow considerably.
7:19 am
>> sarah, when you think about the ratings -- obviously we don't know them yet in this regard when you think about the packages and how much these networks are willing to pay, especially over the last -- well, the past several decades but in the last five or six years because of streaming and everybody chasing netflix, there's been a view that people will spend remarkable amounts of money. we now are living through the sort of netflix correction, right, and seeing that across the board. does that change the dynamic with which you think the pricing for some of these sports packages are going to go >> i think the sports rights packages are just going to continue to get higher and one of the reasons being is because sports is still the last thing that's really keeping the cable bundle alive and as a result, they're the most lucrative type of content you can put on tv. they're going to continue to be lucrative for the streamers. you take a look at what amazon paid, over a billion dollars for
7:20 am
the thursday night football rights that's unprecedented and it's only going to continue to get higher. i also think to tom's point, you have a new dynamic when it comes to how you're going to market these things i was pretty impressed by the fact that amazon was putting those thursday night football logos on some of the boxes it was sending out to customers when you talk about streaming, yes, you're going to get some drop-off because people don't know how to access amazon, but eventually there's going to be a lot more mechanisms in my opinion to start to lure viewers over to the program, whether it's through inventive things that amazon can do on digital that traditional networks cannot, or invented things they can do as an e-commerce company. i wouldn't expect that dooff to be a permanent thing and the drop-off isn't permanent and the viewers keep going up, of course, those sports rights packages are going to continue to go up as well.
7:21 am
>> i want to pivot this conversation for a moment to sports gambling. that's been the next leg of the conversation something dan talked about what disney could do. i want to show you what the disney ceo said on "squawk on the street" just yesterday about sports betting and perhaps how espn may approach it >> one of the things they want is the ability to have a frictionless sports betting potential with not having to have four screens in front of you. we at espn have the ability to do that. we're going to need a partner to do that because we're never going to be a book that's never in the cards for the walt disney company. >> tom, should they be a book? are they too late to be a book i mean, this is -- this is sort of a central question. >> i don't know why they would want to be a book. that's a highly competitive business they don't need another business
7:22 am
with massive losses related to customer acquisition costs draftkings is going to lose about a billion dollars this year, spends like crazy as they were a major sponsor of last night's broadcast and they've lost market share despite that, given how competitive it is in the major gambling states. what they want to be is a player in this that's driving revenue for espn without having that cost and to do that, partnering is the right way the issue with gambling is everything is the same the odds are the same. the user interface on all the gambling sites are the same and the opportunity that espn has is to do something on a more tightly integrated basis that is differentiating from what everybody else is doing out there. to do that, you probably need much more in-game, in-play activity that drives gambling on
7:23 am
everything going on within the game and doing that with a partner who can probably share sports rights costs with them, another way to spread risk year as cord-cutting continues and they have less ability to be able to manage sports rights costs off their traditional business and i think as they look to partner in that way, they got to also focus on social, the alternative feed last night on amazon was all about guys cross talking and betting with each other, not for money, but betting about who was going to be right about what happened that's how you engage people with gambling. they need to be much more into that and if they can do that, they're going to do much better than owning a sportsbook. >> sarah, how much you want to bet -- let's take espn out of it i think that's where they're going to go. longer term, you start thinking about amazon you got the amazon app on your phone. you start to think about apple
7:24 am
do you think that other streamers, if you will, that are now in the sports business will also partner with other gambling sites to put that on their app and all of these folks are not just going to be broadcasting different sports, but they're going to have a betting component on the site? >> absolutely. and i mean, if you take a look at what you saw last night with amazon, amazon's next gen stats are helping you place bets additionally, the reason that espn isn't comfortable being a book and the reason they haven't moved as aggressively into sports betting up until this point where a little bit of investor pressure is because they have this editorial product that they've always wanted to protect. the sports streamers that are in big tech, they don't have an editorial background that they're trying to protect. for them, it's all about the user experience. it's all about increasing engagement so i absolutely think that
7:25 am
that's the next step and we're -- >> a branding perspective, apple might say, we don't want to be in the betting business. i'm just throwing that out there. i don't know where you think an amazon would land on that. >> i don't think that's the case they're focused on how to create the best user experience possible if amazon was concerned about branding, half of the apps in the app store would not be in the app store. if amazon was concerned about branding half of the books they've gotten heat for having within their search results wouldn't be there. they want to offer consumers the best experience point-blank. >> we got to run tom, i apologize, we're up against a hard break we're going to talk to both of you very, very soon again, i'm sure. when we come back, the widespread unionization drive has taken on some of the biggest names in correspondent america we'll debate the labor movement and how corporate america is responding. right now as we head to a
7:26 am
break, check out the winners and losers on the s&p 500. winners include things like extra space, con ed. losers, it's the transports, fedex and others >> announcer: time now for today's aflac trivia question. what state is nicknamed sportsmans paradise? the answer when cnbc "squawk box" continues aaaaaaap!!! is that a goat?! you talkin' about me? gaaaaaaaaaaaap!!! i think this goat is saying “gap.” must be talking about the expenses health insurance doesn't cover. so who's talking about the money aflac pays to help close that gap? gaaaaaaaaaaaap!!! aflac! aflac! gaaaaaaaaaaaap!!! it's about to go down, baby! aflac! aflac! stop that goat! get help with expenses health insurance doesn't cover at
7:27 am
power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills,
7:28 am
you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. ♪♪ ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia.
7:29 am
>> announcer: now the answer to today's aflac trivia question. what state is nicknamed sportsman's paradise the answer, louisiana. the nickname appears on the state's license plate. >> still to come, apple's newest iphones are out today. we're going to bring you to the company's flagship store in new york for the latest. and later transportation secretary pete buttigieg on the tentative rail agreement plus much more on fedex, a stock getting hit hard this morning. and here's ceo raj subramaniam last night on "mad money" talking about u.s. consumer spending >> the u.s. consumer has, you know, definitely spending less,
7:30 am
but the -- the u.s. has been somewhat insulated because the u.s. dollar is the currency of choice for the world and there's some insulation there. but, you know, i do see the u.s. as slowing down too. >> we're going to have much more on the big drop in the stock today. ay tuned, you're watching "squawk box. this is cnbc this is not just laundry. this is laundry that's smarter than the dial. this is ge profile smarter wash technology. fully optimized cleaning, no more guessing. this is smarter cleaning. this is ge profile.
7:31 am
7:32 am
7:33 am
71% of americans now approve of labor years as major u.s. corporations like amazon, apple and starbucks are seeing a surge in unionization joining us now is former congresswoman donna edwards and nancy mace who serves on the house transportation committee and there's a neil young song, i'm a union man. i like playing it. we all i think in general, congresswoman edwards, we all realize, you know, what unions did and the role that unions in the past have played in the middle class and all the good things that have come from junes. but we're aware of some of the ways maybe that it hasn't been
7:34 am
positive overall what -- why did we decline to 7% in the country from much higher levels and are we on our way back up and is that a good thing? >> well, first of all, this didn't happen in isolation part of the reason for the decline in labor organizing has had to do with state aggressive administrations trying to forestall unionization and representation it has to do with rules changes and presidents and congressional administrations that have fought against unionization and so that's not a surprise there's been a decline but i think part of the reason that we're seeing this increase right now in favorability of unions and in union organizing is because workers recognize the power in working together and organizing and i think that's a good thing for the american public. unions brought us minimum wage,
7:35 am
unions brought us a seven-day workweek all of those things. and so workers are quick to realize that i mean, i sat in on a union vote count of starbucks in baltimore city and it was euphoric when the workers there won the right to collective bargaining and so i think that workers across the united states are seeing the powerful in that and are really -- and now also have a president in president biden who is supportive of unions and openly supportive of unions and i think you saw that relationship in the railway negotiation that took place over the last couple of days. >> congresswoman, obviously, there's another side of the story. i don't know whether, you know, unions with a target on their back by certain legislators, whether we would have gotten to this point or whether it was really just as times changed, unions became less relevant in
7:36 am
the country. and certainly right to work states, it's hard to see that as necessarily antiunion instead of just maybe proworker and having the option not to join a union where do you come down >> well certainly i'm in south carolina where we have a right-to-work state and obviously initially when labor unions were created, there was great purpose there. coming from business now into congress, i've seen firsthand some of the productivity issues when labor unions are involved in fact, i saw that in my first private sector job right out of college in south carolina where the technology firm i was at, we were five, six, seven, eight times more productive than the labor union workers of the client we were working for when you look at this week in seeing the power of labor unions when we're having such critical supply chain issues, when our
7:37 am
supply chain is enormously fragile, the threat of a strike because they don't like their wages, when they were making $130,000 on average without any degrees beyond high school which is, i think a great wage right now to increase it the way that they had, one of the highest pay hikes in the industry's history, in the middle of everything that is going on right now, that our country is facing, knowing that the consumer is going to be taking that bill and paying that bill when they go to the store, you know, i question where their heart is, whether it's in the right place or not >> congresswoman edwards >> well, i mean, let me just say, with all due respect to the congresswoman, i think that -- what workers are realizing is that they have really strength in numbers in terms of organizing and these organizing drives aren't just taking place in the private sector, but in the non-profit sector that i work in, a lot of non-profit organizations are facing union drives right now, even
7:38 am
participated in a union organizing drive with the democratic national committee where those workers worked out an arrangement with the management for organizing. and so i think it -- i think it's important for us to create a structure and rules that allow unions to organize without workers being intimidated and bullied and fired for trying to organize a labor union and i don't agree at all, i do think that the decision about -- on the railway negotiation had as much to do with wages as it did to do with quality of work life. the ability to take off a day for sick leave without the threat of being fired. these are sort of basic things that those of us who are in the white-collar sector don't get fired because we have to take a day off or for sick leave. in some of these sectors workers
7:39 am
are subject to that. and so i do think there is power in that kind of organizing and i welcome that and i think employers should welcome that. you have an amazon where the ceo and the company are making billions of dollars off of consumers, but their workers are facing harsh and unfair working conditions and so the ability for workers to come together and to organize, to be able to improve their working conditions, improve their quality of life and strength in their wages, i think is important enough of a concession for those who are also making profits of billions of dollars at the expense of those workers. >> congresswoman, are there still instances where -- i just heard anecdotally, that's a union shop we got to -- if we're going to do any work there, it's got to be done through the unions sometimes there's demand -- there are times when it seems like businesses are saddled with
7:40 am
undue additional costs based on long-standing, entrenched agreements in the past is that still one of the reasons you think that it -- i don't know, maybe it's -- obviously we want workers to make a lot of money. but we wanted corporations to be as profitable as possible as well to compete globally >> right and to be able to compete globally our businesses and corporations and businesses large and small have to be productive and efficient, particularly during a time when every city, including rail is struggling to find workers. both in the short term and the long term and thus we see prices rising above the rate of inflation and the rate of inflation is already at a 40-year high you're seeing when you go to the grocery store, the price of milk, the price of bread, all those things are up. when i take my kids out to lunch, i can't do it for less than $30 we've cut back on the amount that we go out but when you have these
7:41 am
potential strikes, when you see the wages increase as high as they did, almost $30,000 on average, going from $130,000 a year wage to $160,000, that is going to contribute to the fact that there are americans who are struggling to put food on the table, struggling to get sneakers for their kid for their basketball team this year because everything has gone up so quickly and including the average american wage has not been able to keep up with inflation. and i talked to business owners and corporations and, in fact, i met with rail this week talking about the deal and everyone is glad that that crisis is averted, but those prices, the price increase of those wages is going to be passed onto the consumer make no mistake about it, somebody is going to have to pay that bill. and so when you're looking at that particular issue and you look at the struggle that americans are having, that don't get to make that kind of wage, it's only going to exacerbate an already really critical issue facing hard-working americans
7:42 am
right now. >> congresswoman, thank you. congresswoman edwards, thank you as well. we'll have a continuing debate on this, i'm sure. it's good to have you both on this morning and it's a friday nice to look forward to the weekend. see you later. thanks when we come back, fedex getting crushed this morning after cutting costs and withdrawing some guidance. they're talking about big concerns of slowdowns in asia in particular but the ceo told jim cramer that he sees that slowdown coming to the united states as well. we're going to talk more about this right after the break but that stock, down more than 20% overnight. it's a huge chop for a major, major company. also, later we'll talk about the iphone 14 ready to make its debut to the public this morning. we'll talk about what it could mean for apple's bottom line you can get the best of "squawk box" on our daily podcast.
7:43 am
'lbeig bk. te. anyim wel rhtac ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq striving to reach the ultimate goal of zero poverty takes more than everyone's hopes and dreams. at citi, it takes a financial commitment to companies who empower people to lift themselves up. it takes funding and building
7:44 am
on our know-how to help communities grow. that's how citi is helping create a better future by committing one trillion dollars in sustainable finance by 2030. because it takes everything to reach zero poverty. ♪ ♪ ♪♪ do you want some more? wait till you see me on the downhill. see you at home. enjoy it. with the advanced safety features of a lexus es. medium latte, half-caff, no foam. quite the personalized order. i know what i like. i've been meaning to ask you, carl. does your firm offer personalized index investing? hmm? so i can remove a stock that doesn't align with my goals. i'm a broker, not a barista. what about managing gains and losses to be more tax efficient? not a wizard either. looks like schwab personalized indexing can. schwaaab! learn more about personalized indexing at schwab today.
7:45 am
this is not just laundry. this is laundry that's smarter than the dial. this is ge profile smarter wash technology. fully optimized cleaning, no more guessing. this is smarter cleaning. this is ge profile. fedex issues an earnings warning and the stock is getting crushed this morning that phrase gets tossed around a lot, but we are not exaggerating frank joins us with more a lot of questions about what happened here and whether this is a fedex problem or really a systemic one >> yeah, a lot of questions about this report and what it
7:46 am
means for the entire economy shares plummeting after a revenue and eps miss profit 33 below estimates in this earnings warnings the ceo raj subramaniam, when asked if we were on the brink of a worldwide recession, he said yes, saying a major factor is the slowdown in china after covid lockdowns. >> asia is the central manufacturing in the world so when you see these things happen, i feel it's a leading indicator of something more profound the u.s. has been somewhat insulated because the u.s. dollar is the currency of choice for the world and there's some insulation there but, you know, i do see the u.s. as slowing down too. >> fedex guidance just about as bleak as those comments. eps guidance, half of what the street is looking for. fedex pulling its full-year outlook. in june, fedex raised its dividend they're now reducing flights for
7:47 am
air delivery service, cutting hours for workers and closing about 90 fedex office stores fedex did reaffirm its 2025 targets. analysts are having a lot of questions about how the company reaches the profit and revenue goals in particular in light of this earnings warning. the news also hitting other transport stocks rival u.p.s. falling hard. back over to you >> frank, thank you. we're going to be following the story throughout the morning i know you will be too coming up, apple's latest iphones now available in stores. apple ceo tim cook expecting modest revenue growth despite consumers feeling the pinch. we're going to discuss the product launch and much more after the break. and pete buttigieg on the railroad union deal, the state of the economy, inflation and more "squawk box" will be right back.
7:48 am
7:49 am
as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. ™
7:50 am
welcome back to "squawk box," everybody. you are looking -- in a moment you will be looking at a live shot of apple's flagship store in new york city when we get to that video the iphone 14. 14 pro and 14 phone max are all available to buy in fact, there's your live shot but happening just moments ago, tim cook arriving at apple's
7:51 am
flagship store in new york for the opening. let's talk more about the sales expectations for apple and what this launch means. joining us right now is steve cou kovak. also sarah kunz. steve, why don't we talk about the scene there. this has been something for years where people would line up, stay overnight, try to get their hands on these things. i know it's a big deal in china. how about here in new york >> yeah, becky as you said, tim cook did just walk in. i'm expecting him to come out when the doors open at 8 and welcome all of the people who are standing in line, believe it or not here we are all these years after the original iphone. there's a line around the block right behind me. you can't see it in this shot. people are waiting here for the last few hours i talked to one couple from brazil they're here to pick up an apple
7:52 am
watch, not the iphone. they're here to get the new watch before they head back to brazil what this means, the sales mix and so forth, what we're looking for is the mix of pros versus the regular iphone the pros are selling better, which is great for the average selling price that apple gives and remember that last earnings tim cook had said we're going to see modest revenue growth in this quarter that kind of explains why they're releasing this phone a week earlier they're going to get the extra week of sales to round out the quarter and their fiscal year, becky. >> steve, the higher selling price for the pro is a big deal. do they also have higher margins though i heard the margins aren't necessarily higher >> yeah, that's right, becky they are raising prices to kind of offset that a little bit in other countries where their dollar is extra strong so the u.k. is seeing higher prices yeah, that was a surprise last week when i was out in
7:53 am
cupertino. everyone was expecting them to protect their margins, raise prices this is a signal, look, as we're heading into recession, we heard what the fedex ceo was saying. instead of rattling people by raising prices in the u.s., they're keeping it at the same price as the last years. whether they can keep the margins as high as they have, we'll find out in a month when they report earnings. >> there are so many questions today, even more than yesterday after we heard from fedex and their concerns about the slowing economy around the world what does that portend for apple? is the iphone immune or are they going to feel the pinch, too >> i think apple is not going to be immune. we're in an environment where they make such great hardware that you don't necessarily need their new hardware people don't need new phones right now. there's not enough innovation, i think, in this 14 to justify it. if you are looking at your budget, which most people are
7:54 am
right now. i think they were right to say in advance, hey, this is not going to be a door buster, you know, release, but they hope to get some newness you know, to keep the customer loyalty by not raising prices. >> i guess the big question is, too, just in terms of the pull forward effect how many people were buying new phones, new computers, new watches during the pandemic and does that impact things here we've been talking about the consumer and its changing habits the consumer has been acting, again, like a locust, a bunch of locusts where we move from one thing to the next. that's hurting the industries. everything from the retailers, now you see it with transportation, ecommerce, everything that goes with that is there a pull forward effect, was there from apple >> there is definitely something happening where when something's hot, right maybe if the apple watch ends up being this killer feature that everyone is super excited about
7:55 am
and some of the newness there, it becomes viral on ticktock and all of a sudden everyone has to have one for their holiday they might end up with out of stocks they can't satisfy. by the time they get them back in stock, they might be gone that points to the importance of just in time manufacturing and being responsive they want it when they want it and tomorrow they don't want it anymore. if you have the inventory, you can make a ton of money and if you don't, you're probably going to miss out. >> steve, i think that's part of the question you can look at this from the two sides of the economy people want everything so badly the supply chain can't keep up with it. apple has seen part of that. the question of the slowing consumer which one is a bigger deal it's yogi berraism which story is appropriate or are either of these stories
7:56 am
appropriate when it comes to apple? >> it's kind of a mix, becky when i talked to tim cook last quarter he was telling me they can't even test demand for the mac line because they can't make enough due to the supply chain issues they've reworked things over in china to prioritize the iphone keep in mind, becky, most people aren't paying full price for the iphone, not paying 1200 bucks, $1,000 for the iphone. the carriers are offering even sweeter deals as they're fighting for new subscribers verizon is losing subscribers. they offer crazier, better deals up to $1,000 if they switch to a new account. most of them are not going to be spending $1,000 or more. they'll be trading in their old phones, going to a payment plan,
7:57 am
30 bucks a month or so that's why this is able to happen, becky. >> sarah, steve, thank you both. we'll check back in with you, steve, in just a few minutes when the doors open. >> absolutely. coming up, transportation secretary pete buttigiegon the tentative rail agreement that will hopefully avoid the strike. plus, much more on the markets this morning as the indid i seeings are set for a couple of bounce back weeks. aqtures right now down 200 nasd down another 100 points "squawk box" will be right back. nice shot. and it sat down nicely, huh? how did it feel compared to the ball you play? i like the feel right off the face. now let's go to the bunker. just like the one that i play. just as good, if not better. the driver. more poppy. more penetrating. it feels like a tour ball to me. it's a little bit straighter. let's see it on the greens. i like the shape of the dimples. nothing like a nice dimple. maxfli. tour quality performance without the tour ball price.
7:58 am
7:59 am
our clients come to us with complicated situations that occur in their lives. for them it's the biggest milestone, the biggest accomplishment, the sale of a business, or an important event for their family. for them, it's the first and only time. we have seen this literally thousands of times, in thousands of iterations. ♪ ♪ i am vince lumia, head of field management at morgan stanley. whether that's retirement, paying for their children's college education, or their son or daughter getting married, our financial advisors need to make sure that they are making objective decisions, every step along the way. every time you hit a milestone, an anniversary, a life event, the emotions will run high. making sure that you have somebody, a team of individuals that have seen it before, have seen every circumstance and seen every challenge, and have your back when you need it most, is one of the most valuable things a financial advisor could provide to a family. i am vince lumia and we are morgan stanley.
8:00 am
good morning futures reporting sizeable losses again as we make our way towards the opening bell this friday morning on their way for the fourth negative week out of 5 meantime, fed ex warning about profits to the world >> the u.s. consumer has, you know, definitely spending less the u.s. has been somewhat insulated because the u.s. dollar, you know, is the currency of choice for the world. there's some insulation there but, you know, i do see the u.s. going down, too. >> shipping giant ceo sees a
8:01 am
worldwide recession coming we'll break down the stock's premarket plunge how did the last-minute rail deal come together to avoid a nationwide strike? we're going to ask pete buttigieg in a few minutes final hour of "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" at cnbc we are live at the marketplace in times square. i'm becky quick with joe kernen. andrew will be back shortly. this is the way to cap a pretty rough week we are now looking at the dow futures down another 214 points. clearly we are looking at some pretty big declines. comes after some severe losses on tuesday that we have never
8:02 am
really recovered from. if you're looking at what's been happening with the treasury market at this hour, you're going to see that the 10-year is yielding 3.455%. the 2-year continues to climb at 3.886. we did see 3.9% today. >> it's just after 8 p.m. on the east coast apple's fifth avenue store is opening on launch day for the iphone 14. ceo tim cook making his way into the store just moments ago before it opened we aren't far -- >> that is live. >> that is live. >> this is live. you could easily just stop by. >> i think he's got some customers he'd like to meet and greet with this morning. >> i think he would. my entire ecosystem is based on my iphone. whatever people say, oh, my god, i left my phone at home that would be like leaving my oxygen at home. can you go -- i mean, that's the
8:03 am
one bad thing about it. >> i've done it the last few months. >> you have to go back. >> no, i didn't figure it out until i got here. >> don't you think you're getting all kinds of important stuff. you finally get it -- oh, my god, i could have definitely left it at home. >> i tell you somebody who wishes they left it at home, anybody who owns fed ex. that stock is trading off by about 20%. let's take a look at the chart you'll see this morning it's indicated to open somewhere between 163 -- at $163 and change it closed yesterday at 204. $7 that is a decline of 41.21 more than 20%. it withdrew its full-year guidance and outlined significant cost-cutting measures they came out with numbers that were below expectations significantly for earnings but
8:04 am
also, as a result, they're closing stores, offices, hiring flights. fiscal headquarter, revenue was light. last night on "mad money" with jim cramer fed ex's ceo called himself very disappointed in the company's results. he expects a worldwide economic recession. here he is talking to jim about that weakness in asia. >> asia is the central manufacturing in the world. >> right >> so when you see these things happen, i feel it's leading indicator of something more profound we are the bigger things in asia >> i guess the question of shutdowns, whether they continue or not, wlrhether it spreads an
8:05 am
then what he expects and the rest of the universe other shipping stocks are down ups off by 6%. xpo logistics down 5.5%. amazon is down 2.6%. right now we want to get over to dominic chu. he has a look at the key stocks also on the move ahead of the opening belle. dom, what are you looking at now? there's a theme, becky a big theme of the morning, transportation on the passenger transportation side of things we're looking at shares of jetblue which are down by the specific headlines out of the low-cost airline it is raising its metric that revenue per seat mile is coming up 22 to 24%.
8:06 am
it is estimated 19 to 23% higher before it does though, expect higher cost for fuel than the previous estimates but it also does see continued strong demand past the peak summer travel season. next, september. next up, packaging products. they're in focus after analysts downgraded or lowered on a number of key businesses international paper gets downgraded to underperform to hold they pointed to decelerating orders and an inventory glut west rock either downgraded or had their estimates cut. shipping volume decreasing we'll end on ncr those shares are lower sharply after it announced to separate into two publicly traded companies. one will focus on the digital business and the other on the
8:07 am
flagship atm business. joe, nrc, formal national cash register down 14%. i'll send it back over to you. >> new this morning, the white house with the first digital section has been the figure. >> the fed should keep looking into a central bank, digital currency the white house said a digital dollar could offer significant benefits illicit finance. the administration is considering whether to amend the bank's rules to see these transactions. >> financial institutions including those who are trading back and forth
8:08 am
what's a financial inches city snugs is it anybody who holds a part when we are three. >> if i wanted to illicit trades, i wouldn't do it through jpmorgan. >> no, swiss bank. all right. speaking of the biden administration, when we come back, transportation secretary pete buttigieg is going to join us live with key details of how this week's railroad deal came together and wth hthksheere in it can stick stay tuned you're watching "squawk box" on cnbc
8:09 am
new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates,
8:10 am
whose resumes on indeed match your job criteria. visit and get started today. as a business owner, whose resumes on indeed ma your bottom line isa. always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile.
8:11 am
flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. ™ railroads and unions representing thousands of people avoiding what could have been an economically devastating strike. joining us now is transportation secretary pete buttigieg mr. secretary, thank you for being here today i think we all have a lot of questions about what happened. the biggest one being the idea this is a tentative agreement. it still has to be approved by
8:12 am
the union members themselves do you get the sense they will, in fact, sign off on these snerms. >> i think it does have a lot of support as it goes out to members. this is hard fought for workers and railroads agree to move to and it's a deal that enjoys the support of the administration after the president himself got involved urging the parties to reach a deal to do the moving that it took to find that deal space. so i do think as the next few weeks play out, it goes to members, it's going to have a lot of momentum and a lot of propulsion to get through and get finalized. >> we've heard a lot of the terms ahead of time. these were things that the white house panel had recommended and that i believe the railroads had signed off on between the years 2020 and 2025. or i guess 2020, 2024 with a 14% increase immediately
8:13 am
payouts went along the way we also heard some of the membership was not okay with that they wanted more paid sick days, more flexibility, more relief from the precision railroading what pushed it over? >> they came in with a big pay increase over the full life of the contract, that's right it comes to a 24% increase through that, i believe five-year stretch but the issue that was still -- or one of the key issues that was still outstanding had to do with quality of life. remember for these railroad workers, it's very, very different than how it is for -- you know, if you work in an office they'll be on call for several days at a time and sometimes can't get even unpaid let alone unpaid time off if they need a medical appointment or something like that. they can't actually do that without incurring a penalty with the way attendance policies work with an industry that has reduced the number of workers to
8:14 am
a level that's not really resilient. these issues became a real point of contention, a real concern for members and for the unions and they were able at the table to win new accommodations on that, new ways to be able to get paid and unpaid time to take care of family matters, medical matters that needed attention. there were a couple of other things regarding their health care that needed to be resolved. these were still being negotiated into the night. it took a turn i think when the president called personally. not the first time he'd engaged in this but when he called into the room at the department of labor. marty walsh was there. they stressed the importance of getting to a deal. i got some indications at 2 a.m. they had hit a turning point and
8:15 am
by 5 a.m. we had good news. >> that was good news. we're all worrying about inflation. got some data points this week that were a little bit shocking. there's a lot of discussion about that ceremony on tuesday while you were listening and watching what was going on, was it clear to you at the time that that was a mistake, that -- to be shocked -- popping champaign corks about conquering inflation on a day when the stock market at that very moment was down almost 1300 points, over 1200 points after a really horrific inflation report did you say to yourself at that time, what are we doing? this looks really bad. >> no, and i'll tell you why there are dynamics, reports and stock market movements, sometimes big ones that we saw but the benefits of this
8:16 am
legislation will serve us well this represents the most significant climate legislation by any country ever. in the year 2030, the year 2050 we will be looking back at the passage of this legislation i believe as a turning point that helped us avoid some of the worst outcomes of climate change could destroy trillions of dollars in value and cost millions of lives. the president is getting what every american, maybe every member of congress, letting medicare negotiate drug prices. >> on that day, tone deaf. stick to the script. the economy is great the border is secure our cities are safe. >> no one's pretending all of our problems are solved. >> wouldn't it be better to be honest with the american people about the soup that we're in right now and we can all try to deal with it together instead of
8:17 am
just -- >> nobody's saying we don't have any problems, but if you don't pause and recognize the leading of one of the most significant pieces of legislation in the 21st century because we have problems everywhere in the country, then i think you're pulling them down. in the night against inflation and some people thought it was dead and buried before it happened, if we ignore what it means to have created 10 million jobs, the most of any presidency in the history of the republic if we ignore the momentum that has been built, then we're not doing our part to support people. >> it wasn't named the climate act. you deliberately and some people would say erroneously named it the inflation reduction act.
8:18 am
you're celebrating it when we had 40-year highs. you know how that affects people on the low end of things it's like the most insidious problem that an economy can face >> right >> celebrating on that day, it just -- >> the worse about inflation is it means people are paying for more things. pay less for energy, pay less for prescription drugs, pay say yes to legislation we were able to get it to medicare recipients. even get it to electric vehicles we could have a drink over what the acronyms are but all of
8:19 am
these are making very positive and historic difference. >> mr. secretary, let's just stick on this theme of inflation. everyone agrees this was fantastic the strike was averted. when you speak to some of the leaders of industry they will look at things like the pay hikes that come through. this was for a 5-year contract that we're already three years into this is backward looking you're talking about a 24% pay increase and you have to start renegotiating again. in two years' time you'll be back in the same situation that will still fall under your watch, under this administration's watch when you're going to be talking about that same group coming back asking for more money, rightly so, because of the inflationary outlook out there. i think this is where economists and people who watch inflation really worry when it gets into wages and becomes much stickier, it could be a problem that persists for years. this is what we've been hearing about from jason furman and
8:20 am
others what do you think about on that front? >> that's why we're watching not only the backward looking numbers and how the prices have changed over the last month and year, encouraging if you look month to month still very good. i would say the dynamics in the rails/labor industry are distinct you're talking about an industry that has operated at come prablt levels that has reduced the labor force 1/3. the productivity has gone up extraordinarily. we've made the system not as resilient as it could be and there's stress on workers not only on pay and quality of life that means the economics within this industry are distinct, so are the laws
8:21 am
you look at the rail labor act, that's something that is an artifact of this in particular m the pay would look big on the outside, but the quality of life is difficult also truck drivers find safe and secure parking fundamental part of their being able to come to work is a challenge. yesterday we announced the intra grants including truck parking projects in florida and tennessee. i think there's more where that came from. flight attendants, truck drivers, rail workers, we have to be paying attention to not only pay but the quality of
8:22 am
life. >> let's talk about what's happening in the quality of life fedex last night warning that its earnings were going to come in well below expectations the ceo telling jim cramer he sees severe weakness in asia and europe he sees this coming to the united states. are you hearing that from other companies that you're dealing with >> we're certainly clear-eyed about the headwinds we're facing we're seeing a lot of these concerns and questions coming up still -- the growth, the consequences in europe, the fact that we're still far from seeing the end of the ripple effects of covid pandemic related shocks. i think it's not a surprise when you see this kind of uncertainty reported by some of these companies. it's something we're closely watching and trying to deal with to the extent we can do anything helpful. on the logistics side, fed ex, some other competitors involved
8:23 am
in shipping as partners, we're working on making sure there's better data sharing in the logistics sector in the supply chain so that things are moving in a smoother way which whether you've got a red hot economic growth or even softness, it will be a good move to take some of the ee fish ep si out of it. let us know when you are in town and you want to have that drink. >> that drink, those drinks. well, you know what i was saying those first six go down really smooth. coming up, the crypto -- >> no. >> cousin eddie. >> sound like a total lush get up at 3:30 anybody that thinks we're alcoholics, you've got it wrong. the crypto white knight. what's driving him to help res skoe fellow industry players although a couple of days this
8:24 am
week i could have -- you know, i could have under the desk. >> don't say that. people are going to believe you. >> i know, they will cnbc's kate rooney sat down with e 30-year-old billionaire. stay tuned, you're watching "squawk box. good luck.
8:25 am
td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back.
8:26 am
8:27 am
>> you have a white glove, michael jackson glove. >> i have a jersey. >> you do have one >> of course i do. >> you're selling that baby. 1998 nba, this sold for $10.1 million at auction. >> right. >> he wore it. >> andrew, sell it all >> that makes it the most expensive piece of game worn sports memorabilia ever. in that uniform jordan scored 33 points in a win over the utah jazz. >> you know who i bet has a huge collection >> who >> aaron ruell. >> still around. >> remember that shot to win >> i don't remember the actual
8:28 am
shot i remember a lot of his -- a couple of those games where he just was like -- everything was going in it was pretty cool. >> i have a photo in my brain, just the follow through, the whole thing. >> you need the nft. >> do i need the -- >> you need the nft of that. >> or i could just get it on google free. >> for nothing. >> either/or >> talking about crypto, maybe other things, let's talk about what's going on with sam bankman-fried. he is now worth an estimated $11 billion. he could have bought that jordan jersey if he wanted to the exchange is worth $32 billion. it brought in about $1 billion revenue last year. cnbc's kate rooney has more on the ceo's rise in the crypto industry they call him the jpmorgan of crypto. >> reporter: the michael jordan of crypto.
8:29 am
sam bankman-fried has played a big role in the crypto industry. just the role this year, andrew, he spent hundreds of millions of dollars to bail out struggling companies facing bankruptcy, liquidity, you name it he's got a relatively understated life he drives a toyota carolla he lives with ten roommates. sometimes sleeps under his desk on a bean bag chair as well. i sat down with bankman-fried to talk about his role as lender of last resort. >> we only had a few days to make these decisions what we came to believe was the following, the first was that if possible it would be extremely valuable to the ecosystem to back stop some of these places first off backstopping customers and making sure they're okay
8:30 am
stopping the contagion anyone that trans sitivelily did business with any chain of people who did business with one of the troubled assets themselves became troubled then the secondary goal was maybe there are good trades. maybe there's an investment or acquisition that can be done at terms we would be excited about given the sort of need for capital right now. but that was usually not the standard we were able to hold ourselves to in practice the standard was do we feel okay about this from a financial perspective? does this look at least mediocre not a huge loss. maybe gain in expectation? maybe not. that was a bar we had to cross in order for us to feel comfortable, you know, intervening there. often we just weren't sure you looked at a lot of these cases, you know, four days before they were going to file bankruptcy and so we had four days to do all of the diligence we could on the company, eleven
8:31 am
everything about it, understand the industry, their business, their customers, understand how we thought things would unfold voirge ger case is sort of extended a two-piece line of credit the first was 70 million no strings attached. and we knew we might lose that then there's a larger line of credit which would eventually have plugged our best guess at the time as to what the complete hole was, but which had conditions on it if there's just an immediate run on the bank here and the business is going belly up and there's nothing we can do to actually save this, like we don't want to keep going through it we may lose it i don't see that happening >> do you still have enough cash
8:32 am
if you needed to do another bailout? >> yeah. yeah we did we try not to empty the hopper so to speak. we had a couple billion going into this. it lines up roughly with the amount we've raised over the last year and on top of that we had been profitable. >> so a billionish to deploy >> yeah. you have the issue of how much do we feel comfortable in deploying? saying there's another part billion. that is sort of completely unencumbered certainly will get you within a factor of 2 is the right answer. >> you said ftx has the responsibility to seriously consider stepping in why did you have that responsibility >> it's not good for anyone if we have real pain, real blowouts it's not fair to customers it's not going to be good for regulation like it's not even good for anything and so from a longer
8:33 am
term perspective, it's just that was what was important for the ecosystem, it is what was important for people to operate in the eco system other than be worried it will blow up. >> it's too soon to tell bankman-fried has continued that with skybridge capital bankman-fried said ftx is profitable, they have 1/10 of employees and the company has raised about $2 billion in venture capital money. the full 90-minute interview head over to cnbc pro. >> my question for you is this, when he's buying these things, does he buy them in crypto
8:34 am
>> in cash that was part of his reasoning to why they stood up a lot better than some of the other lending companies and the companies they were bailing out, they kept u.s. dollars on the balance sheet so they're not necessarily doing these deals in tokens, these are very traditional structured deals that you might see on wam street he's really taking that more old school approach versus some companies coming in from the venture capitol. these were cash deals or loans in the first place. >> kate, great interview thank you. >> when we come back, trying to make sense of this week's river of data. the markets had to digest the hot cpi number, mix of retail sales and a lot more what do we noah head of next week's meeting
8:35 am
your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit y
8:36 am
8:37 am
the fed is set to begin its latest policy meeting on tuesday. widely expected to hike rates by at least 75 basis points but
8:38 am
there's a growing chorus of people who think the fed should back off already real estate billionaire barry sternlicht is one of them. he joined us on "squawk box" yesterday. >> look at the housing market. you h've caused a crash of unprecedented proportions in the housing market the economy is braking hard. you're going to have a major crash in the housing market and housing prices are going down. you are seeing housing prices correct. they've already took $7 trillion of wealth out of the stock market i mean, the market is doing what it's supposed to do. we're actually braking the market hard and it's taking the excess out nothing the fed is doing is going to change. they're attacking the economy with a sledge ham mer and they don't need to. >> joining us to talk more about the fed rates and the market, edward ardeni and steve liesman and rick santelli. i just, ed, try to think of the days that you've seen in your career do you remember the days of
8:39 am
disinflation, low inflation and really solid growth and what a wonderful thing that is to have to rub all over yourself if you could just do it for years at a time and then if you look at the corollary, converse, whatever you want to call it, i mean, really bad inflation and a possibility of a weak economy. and you've got one is saying we're going off the cliff in terms of the economy we're going off the cliff you have to be really worried. the other side, look at the hot inflation number you should go 1 to 2%. how can you have people who are so certain on opposite fed
8:40 am
advice i think what we have to do is focus on the reality what are they actually saying and doing? it seems to me they are committed to raise the interest rate significantly at this meeting next week. i do think they're going to come around and conclude that maybe they have a credibility problem and i'm trying to get ahead of it trying to catch up to the 2-year treasury note which is saying within the next 2 months or a lot less we'll be at 3.8%. >> steve, i've got a couple of my colleagues here santelli is a little bit older than liesman rick, can you remember where both sides were so certain of --
8:41 am
and neither one is a good outcome. an economy on the precipice of a recession and a fed that needs to go 1 to 2 points at a time? both of those are so -- they're polar opposites. i don't know if i need to say polar. they're opposites. do you remember the last time we had this situation >> no, it is a rather unique situation. what makes it more unique, in the '80s we saw a lot of this. he was at drexel, i was at drexel things have definitely come full circle, but if you look at fed fund futures right now, the november '22 contract all the way to feb '24, all of those are making new contract low prices as we speak. 16 contracts, okay so they're getting powell's message loud and clear his message is hard to argue with i can't imagine he's going less than 3/4 of a point. the problem is, mr.ster sterlict
8:42 am
year over year cpi up 9.1% the pound at the lowest level since '85. the dollar very close to fresh 20-year highs. it's the global recession that somebody needs to pay attention to, joe, because the united states is big enough that we're going to leverage the rest of the world down. >> is that you, steve? >> i think that's exactly right. i agree. we've got to look at the global situation and the global situation, we have been developing a global recession. i think the united states is not going to experience a bad recession. i call it a rolling recession, which means different sectors get hit at different times. >> steve, at least recently you think the economy is, eh, not great but not ready to fall off a cliff. you're behind jay powell and a
8:43 am
couple more, at least a couple more 75 basis point hikes? could you change your mind in a data-dependent way >> yeah, totally i mean, i think the 75 is okay here you know, i think -- you know, i've followed the fed and try to communicate what i think they're thinking and what i think they're saying and i think they're saying they need to get this 3 3/4 to 4% the market may be overdoing just a touch here with the 4.5% look, joe, this opposition to the fed is perfectly fine as long as you have time. he said it's okay for the fed to stop at 3 to 4%, barry said that it would be great to have that conversation we're not having that conversation yet we had core go up in the last one. and that different theory of inflation seemed to take two parts. one is that there's a lot to come down the pike here that has
8:44 am
not been priced into the economy. the other is that there's a lot of data out there already showing that inflation is coming down i have some sympathy with that i have a lot of sympathy with the idea the fed may be the last to know what's going on in the economy given their, you know. >> they missed the financial crisis wallet was brewing so i think there's some sympathy if you have to go to the table, if you think the fed should not go up, you have to come with a different theory of inflation o what's happening and what's going to happen. i don't necessarily hear that from those who are opposing the fed. >> ed, what do you say to that >> well, i think that, again, the fed is going to proceed. i think next week when the fmoc meeting is over we're all going
8:45 am
to be staring at the summary of economic projections to see the extent to which they're changing their trajectory for the fed funds rate i suspect it might be somewhat more hawkish than they expect. it may make a bottom in the market here. i'm not trying to call bottom, i'm just sawying the pessimism i going to be intense. i think powell is going to continue to be quite hawkish in his commentary i agree with steve and rich. steve in terms of the domestic economy has signs of weakness, with rick that the idea that the global economy is suffering from a very strong dollar we're seeing the inflation situation with interest rates when their economies are a lot weaker than ours i think you want the idea of t
8:46 am
neck there is no alternative country. there's data that money continues to pour in from overseas i don'tthink the stock market, the bond market is going to crash here i think global industrials will be looking at the u.s. as a safe haven. >> rick, i'm going to let you sort of summarize a couple of things how bad could it get near term in terms -- could we really be surprised at how weak things really are mortgage rates are dwhaubl they were a year ago. h how quick do they pull in and should the fed -- is 1% in the cards at some point in the future, 100 basis points >> they don't have -- >> it's a metaphor. >> i never love anything i would never rule anything out. i don't know what the future is.
8:47 am
with respect to steve's issue, i completely agree the problem is the word theory, okay they're bad at forecasting they're not really good of theories, which is just a derivative of forecasting. to think you're going to come up with theory forecasting future inflation doesn't make sense to me what does make sense is i don't think inflation is going to be a huge problem, we have a huge recession, the dollar ends up with it. no matter how much they want to control inflation, they're still fighting a war they're fighting volker's war. they don't want to make the quote, unquote same mistakes volker did by pivoting a little early and going back and having to raise rates the ultimate issue should be, in my opinion, that they can't use this hammer the way all of the guests have been talking, against the fed. what they ought to be doing is looking at a 10-year note which still can take out the mid-june
8:48 am
highs at 3.48. >> isn't that based on partly what the fed is going to do, rick it's a bit of a circle right there, right the market inflates the market and the market inflates the fed. >> it's definitely a circle but the problem is it shows investors have a long view that there's going to be a lot of buying in the long end because the world is not going to look good and the u.s. is better than the rest. >> ed, good to see you good to have you on. >> coming up, jim cramer's first take on the markets this morning. want to talk to him about that big fed ex interview he had last night. as a reminder, you can join the most powerful event of the year, cnbc's delivering alpha returning in person on investors and risk and opportunity as we all try to navigate the market
8:49 am
you can point your phone at the adveen if you want to now or he or to you're watching "squawk" on cnbc
8:50 am
my dad was a hard worker. he used to do side jobs installing windows, charging something like a hundred bucks a window when other guys were charging four to five-hundred bucks. he just didn't wanna do that. he was proud of the price he was charging. ♪♪ my dad instilled in me, always put the people before the money. be proud of offering a good product at a fair price. i think he'd be extremely proud of me, yeah. ♪♪ this is not just laundry. this is laundry that's smarter than the dial. this is ge profile smarter wash technology. fully optimized cleaning, no more guessing.
8:51 am
this is smarter cleaning. this is ge profile. let's get down to the new york stock exchange. jim cramer is standing by, and i've been waiting all morning to talk to you about the incredible interview with the ceo of fedex. this was astounding. it has set the tone for the markets today. just what's your take after talking to him is this a fedex problem? is this a broader market problem? >> no, yeah, i think 70% macro, 30% fedex. they do have a cost problem on their regular federal express business, but it made my jaw drop it was one of those interviews, first one, where he just said, look, i don't know what's the matter with china. it's worse than before europe is deeply involved with the cost structure and how
8:52 am
little they have after they spent on their electric and heating bills and that's because of russia. the united states is a little more positive, but still not exceptional, and the worldwide recession, becky, was -- look, i put the words in his mouth i was hoping he would say, no. so, yeah, i think the markets should be down i think the stock's right. >> the 20% decline is jaw-dropping in itself i mean, still trying to figure out the implications from all of this, but that is a rerating overnight, like you can't believe, just in terms of the multiple >> yeah, it is overnight, because the meeting was june 29. they raised the dividend now, he did say he's continuing to buy back stock, and it's obvious they're going to take out costs, about eight-point menu where they can take out costs, but they can't take out costs fast enough, becky they're flying too many planes half full from china or less, and that's, you know, that would be like the apparel that was going to try to make it for the
8:53 am
holiday season and after the holiday season, it just kept flying those planes and those planes were really hurting them. i do think, though, that the macro is very much in evidence, and when you -- i actually said it i said, i hope jay powell listens because this was a wake-up call there are many, many problems around the world, and just because we're better than the others, that does not make us good and, i think that anyone who listens to what raj said last night cannot feel the same about the u.s. economy that you did yesterday before it. >> obviously, the market is paying attention today we're looking at the dow, now down by 350 points, but jim, it was an incredible interview. people have to -- >> thank you very much >> coming up in just a minute, hear more of what you have to say because this is driving the qumaettoy. "sawk box" will be right back.
8:54 am
power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market
8:55 am
with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity
8:56 am
every search you make, every click you take, every move you make, every step you take, i'll be watching you. the internet doesn't have to be duckduckgo is a free all in one privacy app with a built in search engine, web browser, one click data clearing and more stop companies like google from watching you, by downloading the app today. duckduckgo: privacy, simplified. welcome back to squawk fedex and general electric both in the red premarket the former getting crushed after pulling full-year guidance the latter down after its cfo said supply chain issues are still affecting its company's ability to deliver products in a timely manner. as a result, ge's cash flow
8:57 am
remains under pressure joining us right now the mona, the senior investment strategist at edward jones, and the big question this morning, do we think we're in a recession do we think that barry sternlicht is right? has the world changed here >> look, i think the data points are piling up that we're facing a pretty severe slowdown globally you know, as fedex c.o. noted, the u.s. is relatively resilient although not totally immune. markets generally had to absorb a triple whammy of data this week we got the hotter than expected inflation report we got this fedex news last night, which is a proxy for the global economy, and then not to mention s&p from a technical perspective is looking weaker as well below the 50-day moving average, so, you know, i think markets generally are facing some negative headlines this week i think generally, what we're seeing, though, is that as we kind of progress through the year, we need to see the
8:58 am
inflation picture improving. the labor market remains strong. the consumer is still in decent shape, and yes, we're facing a slowdown, but we're not yet seeing recessionary conditions >> i don't know if you heard what edgar was saying. when you think about where this inflection point may be, though, in the equity markets, obviously, the equities are starting -- they have come down remarkably already, and the question is, going into what we're going to hear from the fed and maybe even going out of it, meaning, maybe they're going to be very hawkish, you might even think for their credibility, is that the moment at which you would actually start to buy on some of these lower numbers? >> yeah, you know, i think the fed is probably watching, not only inflation picture, but they are keen on making sure they don'tpush the economy into som sort of unnecessarily severe slowdown or recessionary environment. that's why we're probably thinking 75 basis points more likely next week, rather than the hundred. they will be in more restrictive territory at that point in any case but to your point, when we start
8:59 am
to see that buying opportunity in the weeks ahead, when we get peak hawkishness around the fed and perhaps when we start to see peak bearishness around yields as well, so as yields start to climb, maybe past that 350 on the ten year, it's tougher for markets to rally in that environment, but that volatility is really the opportunity to set up for the year ahead when perhaps the fed can take a pause. perhaps we are looking at an environment post-midterm elections which are historically good for markets, that inflation is moderating as well. >> okay, so, real quick, we literally have 20 seconds. downside from here your expectation upside from here >> yeah, you know i think generally, we could potentially the next support level 3,800, about 3% the next from there is the lows, about 7% downside. but the upside from there is back to 4,200-plus, and so 10%, 15%, so risk-reward is getting more and more interesting. >> okay.
9:00 am
mona, thank you. appreciate it. what a morning it has been let's take a final check on the markets. the red is all over the screen i hate to say it, but that's the case right now, dow off close to 400 points we'll see you next week. make sure you join us. "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla talks to cramer about a global recession even as the two-year comes within 8 points of 4%. our road map begins with that stark warning. >> are we going into a worldwide recession? >> i'm not an economist. >> you know more than economists come on. they just push papers. you actually look at things. >> i think so. >> you think we are?


info Stream Only

Uploaded by TV Archive on